Case Studies: Estate Planning & Wills


Estate Planning - Case Studies

The following case studies on estate planning are presented by Smallwoods Lawyers, Brookvale Northern Beaches. They highlight the need to seek professional advice on drawing up a Will and the consequence should things go wrong.

I had a will but my kids lost out

Helen has children from her first marriage. She and her new partner decided to each contribute $1 million to buy investment assets and to do this through a family trust.

Helen died and, in the course of administering her estate, it was discovered that most of her assets had been contributed to the family trust to buy the investment assets with her new partner. Those assets did not form part of her estate and did not form part of the assets passing to the children of her first marriage.

The family trust provided for the survivor to have the power to appoint and remove trustees. Her new partner, therefore, controlled the trust and the assets in the trust, which included the assets she intended to go to her children.

Never view a will as a stand-alone effective document. It must be considered in the context of all structures including family trusts, companies and superannuation funds.

Several solutions were available to Helen. She could have loaned money to the trust or she could have set up a separate trust allowing her to pass control to a person of her choice.

Smallwoods Lawyers in Brookvale on the Northern Beaches has advised on estate planning matters for over 40 years.  

Is your Will Contestable?

On divorce, as part of a financial settlement or divorce, Graham agreed to make provisions in his Will to leave part of an asset to his and his ex-wife Sally’s two daughters. Graham also agreed to leave the proceeds of two life insurance policies to his ex-wife.

Days before Graham’s death he changed his Will to no longer leave the share of the asset to his daughters as promised. He had also let the insurance policy premiums lapse making the policies worthless.

The Outcome
Sally and the daughters contested the new Will. The court would not nullify the new Will ruling that a person, provided he or she has testamentary mental capacity, may change his or her Will at any time up to the date of death.

The court ruled however that Sally was entitled to damages for the loss of the insurance policies and that the daughters were entitled to make a claim for damages due to the loss of the promised asset.

The lesson
Your Will may still be subject to representations or promises you have previously made.

Smallwoods Lawyers, Brookvale Northern Beaches has advised on estate planning matters for over 40 years.  

Don’t end up in a Nursing Home

The deceased left his widow a right to occupy a property and ensured an alternative house be provided should the property be sold. The rest of the deceased estate was left to relatives.  

Eventually the property was sold and a replacement house purchased. The funds left over from the sale were applied to the widow's needs. The widow was soon placed in a nursing home.

The relatives claimed that difference in the sale and purchase price should not have been paid to the widow.

The son of the deceased claimed the Will gave the right to occupy, arguing the widow could permit others to occupy the home even if she was not living in the house.

The Outcome
1. The widow had a benefit of a life estate and was entitled to occupy the property.
2. The funds left over from the sale should have been divided amongst the relatives.

The Learnings
Where a Will is vague it will be up to the courts to determine the meaning. Take note the Executor can be held personally liable.

Don’t leave it to chance. Smallwoods Lawyers, Brookvale Northern Beaches has advised on estate planning matters for over 40 years.  

Wills – It Pays To Plan For The Unexpected

John and Mary are aged in their early 40s. They have three children aged between 8 and 13.

Their main asset is their home valued at $1.5 million, subject to a mortgage of $250,000 which they own as joint tenants. John has super of $150,000 and Mary has super of $15,000. John has life insurance cover through his super of $150,000.  

Mary’s concern is that if she died and John remarries, that the children’s share in the estate upon John’s death is not adversely impacted.

Although John has every good intention to leave his estate to his children, if he forms a de facto relationship or remarries then his new partner may be entitled to make a claim on his estate, defeating his intentions. This could be complicated because the value of his estate would probably increase during any new relationship.

Mary’s Choices
1. Sever joint tenancy and leave Mary’s one-half interest in the property in a trust which upon John’s death would go to the three children.
2. Arrange life insurance outside of super.  
3. John leaves Binding Death Benefit Nomination to the Trustee of his superfund to leave a benefit to Mary, and then to the three children if Mary predeceases him.
4. Take out life insurance on Mary which is left in trust for the children’s education and needs post aged 21.

For peace of mind plan for those important family contingencies. Smallwoods Lawyers, Brookvale Northern Beaches has advised on estate planning matters for over 40 years.

Wills – When is a Child NOT a Child

Sarah’s brother left a gift to his sister in his will. The will stated that should she pass away before him then the gift would go to her children in equal share.

Sounds simple but unfortunately sometimes these things can become very complex.

Sarah predeceased her brother leaving one biological child and four stepchildren. Sarah raised her husband's children from his first marriage as her own for more than 30 years.  

The solicitor who prepared the will began to administer the estate on the basis that the only beneficiary was the one biological child of the sister who had predeceased her brother. The step children contested this claiming that they should be included in the phrase "children".  

The first judge who heard the case declared that only the biological child of the deceased sister was entitled under the Will. The stepchildren took the case to the Court of Appeal and won. The Court of Appeal said that the word "children" included the stepchildren.

Don’t leave it to chance. Smallwoods Lawyers, Brookvale Northern Beaches has advised on estate planning matters for over 40 years.  

Including your Grandchildren in your Will

John and Mary are in their 70s. They have three sons: one son is married with two daughters, one son is unmarried with no children and the third son is married with two daughters.

Smallwoods Lawyers on Brookvale’s Northern Beaches were instructed that nothing was to be left to the third son whose relationship with his parents had broken down. Our clients were very fond of the third son’s children however and wanted a solution that would not disadvantage them.

The problem
Smallwoods advised John and Mary that the third son may have a claim under the Succession Act. This Act lists children as eligible persons who may claim that inadequate provision has been made in the Will of a parent.  A successful claim may result in the third son receiving a sizeable share of his parent’s estate. To compound this problem the son’s wife was likely to return home to her country of birth taking the grandchildren with her. In this event the grandchildren could miss out on any benefit from the sons share.

The solution
Smallwoods arranged for the estate to be divided into three equal shares. A portion of one share was given to the wayward son by way of a legacy.
The significant remainder of that share was used to establish a trust for the benefit of the grandchildren. The trust would be controlled by independent trustees and go towards the education and general benefit in life of the grandchildren.

Smallwoods Lawyers, Brookvale Northern Beaches have been advising on Wills for over forty years. If your circumstances change significantly be safe and have your Will reviewed to ensure it remain appropriate and achieve your objectives.


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